American
workers would be surprised at the number of contracts they have supposedly
signed over the years. Although most are
incessantly reminded by their employers that their contract is “at
will”—meaning they can be fired at any time for any reason (other than an
unlawful reason such as discrimination), when they attempt to sue, participate
in a class action, or pursue benefits to which they are entitled, they are
suddenly confronted with an “agreement” they either never signed or do not
remember signing. Courts are
increasingly willing to honor these purported contracts, even though they lack
many of the qualities of typical contracts and skirt the requirements we all
learned in Contract Law in our first semesters of law school.[1]

So
many employees do not know what they are signing. These purported “contracts” are presented to
employees (often as mandatory) in their job application or in their first days
on the job. Typically, employees come
in, sign a series of documents, including expected ones like W-4s and I-9s for
taxes. In that large packet is an
acknowledgement of receipt of the employee handbook, which contains a mandatory
arbitration clause that prohibits class actions. Or they sign up for disability benefits but
do not understand that if they ever become disabled, they are entitled to only
2 years of benefits if the disability is based on a mental illness. Or that their benefits—which they expect to
be 60% of their salary—are offset by any Social Security Disability
benefits. Or they sign a severance
agreement not realizing that they are waiving their right to sue if their
disability insurance benefits are unreasonably denied to them.

There
are multiple problems from a contract law perspective.

First,
most are contracts of adhesion. That
means the party with superior bargaining power drafted them—often with the help
of an experienced lawyer—and employees are not free to negotiate the
terms. Yes, they can walk away from a
job if they do not like the terms, or they can risk their job (in this bad
economy) by pushing back and trying to negotiate. For obvious reasons, few do. Furthermore, with so many employers using the
same adhesive language, there are few real options. For low-skilled and low-wage workers, who are
so often the ones who need legal protections, the choices are even more
limited. Yet even courts that
acknowledge the adhesive nature of the contracts will often enforce them
anyway.

Second, Contract
law is premised on a “meeting of the minds.”
Unfortunately, as employment law has developed, that premise has been completely
forgotten. There can be no meeting of
the minds if the employee does not understand, have access to, or become aware
of the terms.

Finally, some
of these supposed contracts are never even signed. Merely by continuing to work, employees have
been deemed to be bound by oppressive terms.

The end result is
that people release claims they don’t know they have or don’t understand. Employees release methods of recovery—which
in effect exonerates employers for violations of the law when those methods are
really the only viable ones. People
don’t have the benefits they think they have.
And, as Professor Gibson notes with respect to consumers, the fiction
that employees have consented permits companies “to unilaterally dictate terms”
to employees “without facing the economic consequences.”

[1] Nothing in this blog
posting is intended to be legal advice or legal argument regarding any specific
case.